With all the bullish forecasts out there, it is easy to forget that Amazon still faces enormous challenges ahead. The risks that could torpedo the rosiest of projections range from the political to the prevailing business and economic environment.

Amazon Invites The Anti-Trust Police

When the Democratic primaries began, Amazon came under intense scrutiny from some candidates calling for the tech giant to be split up. But the issue quickly fell by the wayside as attention shifted to the COVID-19 outbreak.

U.S. House of Representatives Judiciary Chair Jerry Nadler called it a “troubling report.” The details have given legislators more reasons to suspect Amazon of using anti-competitive practices. The issue of competition won’t go away anytime soon as Amazon becomes indispensable in the pandemic economy.

Microsoft And Google Are Coming

Amazon’s cloud computing division AWS is the undisputed cash cow of the online retail giant. Despite representing just 11% of Amazon’s total revenues in the most recent quarter, AWS contributed 67% of the operating income.

AWS is currently the worldwide leader in the cloud computing market, but its competitors are growing faster.

Although Azure and Google Cloud are coming from a lower revenue base, they still offer significant competition for AWS.

Amazon Escapes Coronavirus-Fueled Demand Destruction… For Now

Thanks to the coronavirus pandemic, a global economic downturn is now a foregone conclusion. Last month, U.S. retail sales plunged by a record 8.7%. At the same time, online retail sales increased 3.1%–largely because of the demand caused by shelter-in-place orders.

As U.S. jobless claims eclipsed 26 million, expect to see more Americans with reduced purchasing power–a fact that will hit Amazon hard. It has so far been spared as online shopping is the only option for a lot of people. And with businesses already beginning to cut back on expenditure, AWS will be affected too.

Analysts may have painted a rosy picture for Amazon. This will further be reinforced by stellar results when the e-commerce giant reports earnings on April 30. From there, reality will start biting.

Disclaimer: The opinions expressed in this article do not necessarily reflect the views of WaheedCh.com and should not be considered investment advice from WaheedCh.com. The authors holds no interest in any of the stocks mentioned above.

3 Things to Consider Before Wasting You Money on Amazon Stock
Reviewed by Chaudhry
on
April 27, 2020
Rating: 5